The Town of Winthrop’s financial picture is moving in the right direction, according to Tony Roselli of Roselli Clark and Associates, who appeared before the Town Council Tuesday night to discuss the audit of town finances for Fiscal Year 2009.
Roselli is a partner in the Woburn accounting firm that has performed the audit for the town for several years.
Roselli said in 2008 Winthrop was one of only five communities (out of 351 cities and towns) in the state that had a negative balance ($400,000) of free cash – which is the town’s reserve fund at the end of the year.
“Typically a town has a little surplus left over every year and it accumulates in the next year to the point where you have a sufficient emergency/stabilization fund,” said Roselli.
Roselli said that Winthrop’s lack of reserve funds and other weaknesses in the town’s financial system resulted in the town being placed on the state watch list by the Department of Revenue. The state also imposed a deadline of September 30 for the town to complete its financial statements or risk not having its tax rate certified.
“I thought that deadline was impossible, but I’m very happy to say that everyone came together here as a team – the School Department, the Accounting Department, the Treasurer/Collector, Assessors, MIS, and Town Manager’s Office – to get this done,” said Roselli, who specifically lauded the efforts of Finance Director Michael Bertino in making the deadline.
Importantly, the town started to reverse its negative free cash trend “and had a little bit of free cash at the end of (Fiscal Year) 2009 [July 1, 2008-June 30, 2009].”
Roselli said a town the size of Winthrop, which has approximately a $40 million budget, should have a reserve fund of $4 million. “At the end of 2009, you had $100,000, so this kind of illustrates what you have to do in the coming years.”
Roselli told the Council that the residents voting to approve the Proposition 2 ½ override last year was "critical" to the town’s financial turnaround. "That was a step in the right direction and I applaud the people for voting for that and recognizing that Winthrop needed that," said Roselli.
Council President Jeffrey Turco suggested that the next step should be to take the $100,000 in free cash and place it in the town’s stabilization fund. He said the town should not spend its reserve funds but rather try and get closer to the 10 percent [$4 million] figure in its reserve fund.
Roselli agreed with Turco’s assessment. “Towns should be stashing away its money in a stabilization fund. And then the outside investors will take note of that and you’ll be awarded with a good bond rating. The bond rating will result in lower borrowing rates and overall financial health for the community.”
While Roselli praised Bertino’s work and dedication, he inferred that the town’s finance director is often asked to undertake responsibilities in other areas of town government.
“The finance director gets involved in a lot of things – things that normally shouldn’t be dragging him outside of the accounting office,” said Roselli. “I’m not saying that there’s anything wrong with that, but if that’s going to continue to be the case, you need to have somebody in that office who is just a full-time accountant – debits, credits, reporting, the whole nine yards – and then Michael can be involved in helping out on the managerial side as he is doing.”